Shri N. Suseelan, Surat V. The ACIT., Circle-1, Surat

ITA 2389/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8792 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 10-11-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: M K PATEL
• Keywords: Residential status; Reasonable cause; Onus to prove; Revised return
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING: 15.03.10 DRAFTED ON: 15.03.10 ITA NO.2389/AHD/2006 ASSESSMENT YEAR : 2004-2005 SHRI N. SUSEELAN 21, VITTHAL NAGAR SOCIETY, P.O. NAVYUG COLLEGE, RANDER ROAD, SURAT. VS. THE ACIT, CIRCLE-1, SURAT. PAN/GIR NO. : ABTPN 4977B (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.K.PATEL A.R. RESPONDENT BY: SHRI C.K.MISHRA SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, SUR AT DATED 19.09.2006 FOR THE ASSESSMENT YEAR 2004-05. 2. THE SOLE GROUND OF THE APPEAL IS RELATING TO CON FIRMATION OF THE PENALTY OF RS.23,42,010/- LEVIED U/S. 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME FOR AY 2004-05 SHOWING TOTAL INCOME OF RS .11,23,352/- AND AGRICULTURAL INCOME OF RS.85.,000/- AND SHOWN I TS STATUS AS NON-RESIDENT. THE RETURN WAS PROCESSED UNDER SECT ION 143(1) OF THE ACT ON 4.01.2005. SUBSEQUENTLY, THE CASE WAS SE LECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE. FROM THE DETAILS FILED BY ASSESSEE IN ITA NO. 2389/AHD/2006 - 2 - RESPONSE TO THE NOTICES, THE AO FOUND THAT IN THE Y EAR UNDER CONSIDERATION, ASSESSEE HAD VISITED DUBAI AND STAYE D THERE FOR DIFFERENT PERIODS. HE ALSO NOTICED THAT ASSESSEE H AD BROUGHT RS.69.97 LACS FROM ABROAD ON DIFFERENT DATES DURING THE YEAR. THE AO FOUND THAT THE ASSESSEE WAS IN INDIA FOR A PERIO D OF 80 DAYS DURING THE CURRENT ASSESSMENT YEAR AND ON EXAMINING THE DETAILS OF STAY IN INDIA AND ABROAD IN THE EARLIER YEARS, IT W AS FOUND THAT THE ASSESSEE WAS A RESIDENT AND NOT A NON-RESIDENT. THE ASSESSEE FILED REVISED RETURN IN WHICH THE ENTIRE AMOUNT OF RS.69.97 LACS WAS OFFERED FOR TAXATION AND ADDED TO THE INCOME OF THE ASSESSEE. THE AO ALSO FOUND THAT ON ACCOUNT OF LOW WITHDRAWAL FOR HOUSE HOLD EXPENSES, AN ADDITION OF RS.1 LAC WAS MADE TO THE I NCOME OF THE ASSESSEE. THE AO INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT AND LEVIED A PENALTY UNDER SEC TION 271(1)(C) OF THE ACT OF RS.23,42,010/- OBSERVING THAT ASSESSEE H AD CONCEALED THE PARTICULARS OF HIS INCOME AND ALSO FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME ON THE GROUND THAT IF SC RUTINY HAD NOT TAKEN PLACE THAN THE ASSESSEE WOULD NOT HAVE REVISE D THE RETURN BY CHANGING THE STATUS FROM NON-RESIDENT TO RESIDEN T. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD AS UNDER:- 2.3.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND OBSERVATIONS OF THE A.O. THE FACTS IN THIS CASE ARE NOT UNDER DISPUTE. BOTH THE A.O. AND THE APPELLANT HAVE AGREED THAT THE APPELLANT HAD SHOWN HIS STATUS AS 'NON-RESIDENT' IN THE ORIGINAL RETURN AND HENCE DID NOT OFFER THE FOREIGN REMITTANCE FOR TAX. HOWEV ER, AFTER THE ISSUE OF NOTICE AND AFTER THE A.O. CALLED FOR T HE DETAILS OF STAY IN INDIA AND ABROAD, THE APPELLANT REVISED THE RETURN SHOWING STATUS AS 'RESIDENT' AND OFFERED THE FOREIGN REMITTANCE FOR TAX. 2.3.2. THEREFORE, THE ONLY ISSUE TO BE DECIDED IS W HETHER ON FACTS THERE IS CONCEALMENT OF REAL INCOME OR NOT AND ITA NO. 2389/AHD/2006 - 3 - WHETHER THE ASSESSEE DECLARED HIMSELF AS 'NON-RESID ENT' IN BO N A FIDE WAY OR NOT. WHETHER THERE WAS REASON ABLE CAUSE FOR THE ACTION OF THE ASSESSEE IN SHOWING HIM SELF AS 'NON-RESIDENT' OR NOT. 2.3.3 IN THE PRESENT CASE THE ARGUMENT OF THE APPEL LANT THAT IT WAS NOT AWARE OF THE CORRECT POSITION OF LA W IS NOT ALL ACCEPTABLE. THE APPELLANT HAS BEEN RUNNING A WE LL MANAGED COMPANY IN INDIA AND HAS BEEN GOING ABROAD QUITE A LOT. THE APPELLANT AND ITS COMPANY HAVE BEE N ADVISED BY A REGULAR AND LEARNED C.A. THEREFORE, IT CANNOT BE SAID THAT THE APPELLANT WAS NOT AWARE OF THE COR RECT POSITION OF LAW. IN THE ORIGINAL RETURN FOR A.Y.200 4-05, THE APPELLANT HAD CLEARLY GIVEN ITS STATUS AS 'NON-RESI DENT' EVEN THOUGH IT WAS VERY MUCH AWARE AS TO HOW MUCH T HE APPELLANT HAS STAYED IN INDIA AND HOW MUCH IT HAS S TAYED ABROAD. THE PASSPORT IS WITHIN THE POSSESSION OF TH E APPELLANT AND IT WOULD HAVE GIVEN THE TOTAL NUMBER OF DAYS THE APPELLANT REMAINED ABROAD AND TOTAL NUMBER OF DAYS HE REMAINED IN INDIA. MERELY, BECAUSE THE AMOU NT HAS BEEN SHOWN IN THE INCOME EXPENDITURE A/C. ON TH E INCOME SIDE UNDER THE HEAD 'TRANSFER FROM ABROAD', DOES NOT MEAN THAT THE APPELLANT HAS DISCLOSED THE AMOUN T FOR TAXATION PURPOSES. THE FACTS IN THIS CASE HAVE NOT BEEN DENIED BY THE APPELLANT. THE ONLY ARGUMENT OF THE APPELLANT IS THAT HE WAS NOT AWARE OF THE PROPER LA W AND LATER ON HAD PROPER APPRECIATION OF LAW HE REVISED THE RETURN DISCLOSING HIS RESIDENTIAL STATUS AS RESIDEN T. 2.3.4 IN THIS REGARD, IT IS STATED THAT WHAT IS REA SONABLE CAUSE HAS BEEN EXAMINED BY VARIOUS COURTS AND THEY HAVE STATED THAT WHAT IS REASONABLE CAUSE CANNOT BE DEFI NED PROPERLY. THE HON'BLE DELHI HIGH COURT IN AZADI BAC HAO ANDOLAN (252 ITR 471) STATED THAT 'WHAT WOULD CONST ITUTE REASONABLE CAUSE CANNOT BE LAID DOWN WITH PRECISION '. IT WOULD DEPEND UPON THE FACTUAL BACKGROUND. REASONABL E CAUSE, AS APPLIED TO HUMAN ACTIONS IS THAT WHICH WO ULD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDI NARY PRUDENCE. REASONABLE CAUSE CAN BE REASONABLY SAID T O BE A CAUSE WHICH PREVENTS A MAN OF AVERAGE INTELLIGENC E AND ORDINARY PRUDENCE, ACTING UNDER NORMAL CIRCUMSTANCE S, WITHOUT NEGLIGENCE OR INACTION OR WANT OF BONAFIDE. IN THIS LIGHT THE PRESENT CASE WILL BE EXAMINED. 2.3.5 THE APPELLANT WAS HAVING THE PASSPORT IN HIS OWN POSITION. A REASONABLE AND RATIONAL PERSON WOULD CO NSULT ITA NO. 2389/AHD/2006 - 4 - THE PASSPORT TO KNOW AS TO HOW MUCH DAYS HE HAS BEE N IN INDIA AND HOW MUCH ABROAD. THIS IS A SIMPLE THING T HAT ANY C.A. ASKS WHILE FILING THE RETURN OF A PERSON W HO WAS ABROAD FOR QUITE SOMETIME. THEREFORE, IN THE PRESEN T CASE, THE EXPLANATION GIVEN BY THE APPELLANT THAT IT WAS NOT AWARE OF THE LAW IS NOT CORRECT. FURTHER AS HAS BEE N HELD BY THE HON'BLE M.P. HIGH COURT IN THE CASE OF D&H SECHERON ELECTRODES PVT. LTD. V/S CIT 144 TAXMAN 68 9 (2005), THE FACT OF SUPPRESSION IS VERY MUCH WITHIN THE KNOWLEDGE OF THE APPELLANT ESPECIALLY A COMPANY BEI NG MANAGED BY C.A.S. THE HON'BLE COURT FOUND THAT A PROFESSIONALLY LED COMPANY MANAGED BY CAS CANNOT AR GUE THAT THERE WAS NO DELIBERATE AND CONSCIOUS ATTEMPT FOR CONCEALMENT OF INCOME. IN THE PRESENT CASE ALSO THE APPELLANT HAS BEEN ADVISED BY PROFESSIONAL HELP IN THE FORM OF CAS AND HENCE TO ARGUE THAT IT WAS NOT AWAR E OF THE PROPER LAW IS NOT CORRECT. FURTHER THE ARGUMENT OF THE APPELLANT THAT THE AMOUNT BROUGHT FROM ABROAD WAS DISCLOSED IN THE INCOME EXPENDITURE A/C. AND HENCE CONCEALMENT PENALTY SHOULD NOT BE LEVIED IS NOT COR RECT BECAUSE IN THE CASE OF VIDYAGAURI NATWARLAL 238 ITR 91 (GUJ.), THE HON'BLE HIGH COURT REVERSED THE ORDER O F THE TRIBUNAL AND STATED THAT MERE DISCLOSURE OF THE SAM E AS CASH CREDIT WOULD NOT AMOUNT TO DISCLOSURE TO SAVE THE ASSESSEE FROM THE CONSEQUENCE OF CONCEALED INCOME. THE HON'BLE GUJARAT HIGH COURT, IN COMING TO THE CONCLU SION, REFERRED TO ITS EARLIER DECISIONS IN OTHER CONTEXTS , WHETHER WHAT WOULD CLEARLY BE TAXABLE HAS BEEN SHOWN IN PAR T III/IV WITH A VIEW TO PAY LESSER SELF-ASSESSMENT TA X WITH THE POSSIBLE CHANCE THAT THE ASSESSMENT WOULD NOT B E TAKEN UP FOR SCRUTINY AS THE USE OF THE PROVISIONS CAN BE MADE ONLY WITH CLEAR RISK OF PENALTY. FROM THIS IT IS VERY CLEAR THAT WHAT THE APPELLANT MIGHT HAVE THOUGH THA T THE CASE MAY NOT BE TAKEN UP FOR SCRUTINY AND HENCE THE APPELLANT IS 'RESIDENT' OR 'NON-RESIDENT' WILL NEVE R COME INTO QUESTION. THE CASE RELIED UPON BY THE APPELLANT OF V. SURESH CHANDRA MITTAL 251 ITR 9 IS DIFFERENT ON THE FACTS BECAUSE IN THAT CASE THE HON'BLE ITAT CAME TO THE F INDING THAT THE REVISED RETURNS WERE NOT FILED VOLUNTARILY AND THE ADDITIONAL INCOME OFFERED ONLY TO BUY PEACE AND TO AVOID LITIGATION. IN THE PRESENT CASE, IT IS ONLY WHEN SC RUTINY NOTICE WAS ISSUED AND WHEN THE DETAILS OF RESIDENCE OF THE APPELLANT WAS ASKED FOR THAT THE APPELLANT REVISED THE RETURN KNOWING FULLY WELL HE HAS BEEN CAUGHT AND NO THING MORE IS REMAINING. THE MOMENT THE APPELLANT GIVES T HE DETAILS OF STAYING ABROAD HE WOULD BE CAUGHT IN THE SENSE ITA NO. 2389/AHD/2006 - 5 - THAT HIS STATUS WOULD BE DECLARED AS RESIDENT AND H ENCE THE WHOLE AMOUNT BROUGHT FROM ABROAD WOULD BE TAXABLE. IN THE CASE OF A.V.JOY ALUKKAS V/S. CIT 185 ITR 638 , THE HON'BLE KERALA HIGH COURT HELD THAT RETURN FILED PR IOR TO ISSUE OF NOTICE WOULD QUANTIFY FOR WAIVER OF PENALT Y. IN THE CASE OF K.M.BHATIA (QUARRY) V/S. CIT 193 ITR 379 (G UJ.) AND SUNANDA RAM DEKA VS. CIT 210 ITR 988 (GAUHATI), THE HON'BLE COURT HELD FILING REVISED RETURNS AFTER DISCOVERY OF THE OMISSION WHETHER IT IS INADVERTENCE DUE TO A BONAFIDE INADVERTENCE OR MISTAKE OR NOT AWARE THERE WAS DELIBERATE CONCEALMENT. 2.3.6 THE PREPONDERANT VIEW OF THE COURTS AS REGARD S ITS EFFECT ON PENALTY HAS BEEN THAT THE ASSESSEE COULD NOT AVOID THE CONSEQUENCES OF A DELIBERATELY FALSE AND ORIGINAL RETURN BY FILING A REVISED RETURN AFTER THE CONCEAL MENT HAS BEEN BROUGHT HOME BY THE A.O. THIS VIEW CAN BE TAKE N TO HAVE BECOME FINAL AFTER THE DECISION OF THE HON'BLE SUPREME COURT BY A BENCH OF 3 MEMBERS IN THE CASE O F G.C.AGARWAL VS. CIT 186 ITR 571 AND DECISION OF THE HIGH COURT IN F.C.AGARAWAL VS. CIT 102 ITR 408 (GAUHATI) WHERE IT WAS FOUND THAT THE PENALTY WAS EXIGIBLE AS THE ASSESSEE WAS NOT ABLE TO ESTABLISH THAT THE MISTAKE IN THE ORIGINAL RETURN WAS INADVERTENT. IN VIEW OF THIS DE CISION, RELIANCE PLACED BY THE APPELLANT ON VARIOUS DECISIO N IS NOT FOUND TO BE APPLICABLE TO THE ASSESSEE'S CASE. IN V IEW OF THE ABOVE DECISION, IT IS CLEAR THAT THE ASSESSEE H AD DELIBERATELY SHOWN WRONG RESIDENTIAL STATUS IN THE ORIGINAL INCOME AND IT IS ONLY WHEN UNDER SCRUTINY THE DETAI LS WERE ASKED ABOUT THE STATUS OF RESIDENCE WHEN THE APPELL ANT REVISED THE RETURN SHOWING CORRECT STATUS AND THERE BY SHOWING THE REMITTANCE FROM ABROAD AS TAXABLE INCOM E. 2.3.7 AS REGARDS ADDITION ON ACCOUNT OF LOW WITHDRA WAL FOR HOUSEHOLD EXPENSES, IT IS STATED IN THE ENTIRE SUBM ISSION DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS NOT BEEN ABLE TO SHOW AS TO HOW THE APPELLANT HAD INCOM E FOR INCURRING THE EXPENDITURE ON HOUSEHOLD EXPENSES. EV EN THOUGH THIS MAY BE AN ESTIMATED ADDITION, STILL THE FACT REMAINS THE APPELLANT REQUIRES MONEY FOR RUNNING TH E HOUSE AND IN THE ABSENCE OF SHOWING THE AMOUNT IS AVAILABLE, THE PENALTY IS LEVIABLE. IN THIS REGARD THE A.O. HAS BEEN ABLE TO PROVE THAT THE APPELLANT DID NOT H AVE ENOUGH MONEY TO RUN ITS HOUSEHOLD EXPENSES. AS DECL ARED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF SMT . K. MEENAKSHI KUTTY 258 ITR 494, PENALTY CAN BE LEVIED IN THE ITA NO. 2389/AHD/2006 - 6 - CASES WHERE INCOME IS INCREASED BY ESTIMATING THE C ORRECT INCOME WHERE ASSESSEE HAD SHOWN LOWER ESTIMATE. IN THE PRESENT CASE, THE APPELLANT HAS FAILED TO SHOW FROM WHERE HAS HE MET THE HOUSEHOLD EXPENSES WITHOUT WHICH HE WOULD NOT BE ABLE TO SURVIVE. HE CAN AT BEST ARGUE THAT ESTIMATE IS HIGHER BUT THAT HAS NOW BEEN CONFIRMED IN THE APPEALS. HENCE CONCEALMENT ON THIS ACCOUNT IS PROVE D. FURTHER THE LAW REGARDING LEVYING OF CONCEALMENT PE NALTY IS AS UNDER: 3.1 THE SETTLED POSITION OF LAW IN RESPECT OF LEVY OF PENALTY UNDER SECTION 271(L)(C) OF THE ACT HAS BEEN LAID DO WN BY THE HON'BLE SUPREME COURT IN THE CASE OF B.A. BALASUBRAMANIAN AND BROS. CO.V. CIT (1999) 236 ITR 977 (SC) FOUND THAT THE DECISION IN CIT V. ANWAR ALI (1 970) 76 ITR 696 HOLDING THAT IT IS FOR THE REVENUE TO PROVE CONCEALMENT BEFORE LEVY OF PENALTY IS LAW, NO LONGE R HOLDS THE FIELD, AFTER THE INTRODUCTION OF EXPLANATION TO SECTION 271(L)(C), WHICH SPECIFICALLY STIPULATES, THAT WHER E THE DIFFERENCE BETWEEN THE RETURN AND ASSESSED INCOME EXCEEDS THE SPECIFIED LIMITS, THE BURDEN OF PROOF I S ON THE TAX-PAYER. THE LIMIT IS NOW REMOVED SO THAT, ANY DIFFERENCE WILL ATTRACT THE EXPLANATION. 3.2 THE SU PREME COURT IN THE B.A.BALASUBRAMANIAN & BRS. CO. DECISIO N REFERRED TO THE EARLIER DECISIONS IN CIT V. MUSSADI LAL RAM BHAROSE (1987) 165 ITR 14, CIT V. K.R. SADAYAPPAN (1990) 185 ITR 49(SC) AND ADDL.CIT V. JEEVAN LAL SA H (1994) 205 ITR 244 (SC). SINCE THIS DECISION IS A S HORT ONE AND HAS FOLLOWED THE THREE EARLIER DECISIONS, T HESE SHOULD NO DOUBT, BE READ TOGETHER FOR UNDERSTANDING THE FULL SCOPE OF THE EXPLANATION. 3.3 IN CIT V. MUSSADILAL RAM BHAROSE'S CASE (1987) 165 ITR 14 (SC), THE DIFFERENCE BETWEEN THE RETURNED AN D ASSESSED INCOME AROSE BECAUSE BOTH SALES AND PROFIT S WERE ESTIMATED, SINCE THE BOOKS WERE NOT VERIFIABLE . THE TRIBUNAL FOUND THAT THOUGH THE BOOKS CONTAINED DEFE CTS ON THE BASIS OF WHICH THE RETURN WAS FILED, THE DIFFER ENCE DID NOT ARISE DUE TO ANY GROSS OR WILLFUL NEGLIGENCE AN D MUCH LESS ON ACCOUNT OF FRAUD. AFTER REVIEW OF THE VARIO US DECISIONS OF HIGH COURT ON THE SUBJECT, THE SUPREME COURT CONCLUDED THAT IT IS NOT A CASE, WHERE THERE WAS NO EVIDENCE OR THERE WAS SUCH EVIDENCE ON THE BASIS OF WHICH NO REASONABLE MAN WOULD HAVE ACCEPTED THE EXPLANATI ON OF THE ASSESSEE. IT WAS POINTED OUT THAT THE PRESUM PTION RAISED BY THE EXPLANATION STOOD REBUTTED IN THE FAC TS OF ITA NO. 2389/AHD/2006 - 7 - THE CASE, BECAUSE OF THE ABSENCE OF ANYTHING TO SUG GEST GROSS OR WILLFUL NEGLIGENCE OR FRAUD. 3.4 IN CIT VS. K.R. SADAYAPPAN (1990) 185 ITR 49, T HE ASSESSEE WHO HAD PAID ON-MONEY OF RS.18,750/- FOR PURCHASE OF A PLOT IN HIS SON'S NAME WAS UNABLE TO EXPLAIN THE SOURCE OF SUCH ON-MONEY PAYMENT TO THE SATISFAC TION OF THE ASSESSING OFFICER, SINCE THE CASH FLOW STATE MENT ON THE BASIS OF WHICH THE EXPLANATION WAS TENDERED WAS FOUND TO CONTAIN DEFECTS LIKE ABSENCE OF F DRAWINGS FOR PERSONAL EXPENSES. THE EXPLANATION TO SECTION 271(L )(C) WAS RELIED UPON FOR LEVY OF PENALTY. THE TRIBUNAL F OUND THE ASSESSEE'S EXPLANATION WAS NOT ONLY NOT CONVINCING, BUT ALSO FALSE, BECAUSE CASH SOUGHT TO BE AVAILABLE COU LD NOT HAVE BEEN AVAILABLE, BUT ALL THE SAME HELD THAT THE RE WAS NO CASE FOR PENALTY, SINCE THE INCOME-TAX DEPARTMEN T HAS NOT SHOWN THAT THE ON-MONEY PAYMENT REPRESENTED CONCEALED INCOME OF THE ASSESSEE FOLLOWING THE RATI ONALE OF THE DECISION IN CIT V. ANWAR ALI (1970) 76 696 ( SC). THE SUPREME COURT HELD THAT WHERE THE EXPLANATION W AS FALSE, IT CANNOT BE SAID THAT THE PRESUMPTION RAISE D BY THE EXPLANATION UNDER SECTION 271(L)(C) STOOD REBUTTED BY 'COGENT, RELIABLE AND RELEVANT MATERIAL'. IT FOUND THAT THE DECISION OF THE TRIBUNAL AND THE HIGH COURT DID NOT ACCORD WITH THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN MUSSADILAL RAM BHAROSE'S CASE (1987) 165 ITR 14. 3.5. IN ADDL.CIT V. JEEVAN LAL SAH (1994) 205 ITR 2 44, THE SUPREME COURT WAS DEALING WITH PENALTY PROCEEDI NGS INITIATED ON REASSESSMENT, WHICH WAS PROMPTED BY SO ME INFORMATION IN THE POSSESSION OF THE DEPARTMENT. TH E ASSESSEE HIMSELF OFFERED HIGHER INCOME DISCLOSING C ERTAIN DEPOSITS AND INTEREST, WHICH HE HAD NOT DISCLOSED E ARLIER. THE TRIBUNAL AND THE HIGH COURT FOUND THAT NOTWITHSTANDING THE EXPLANATION, ANWAR ALI'S CASE R EQUIRED DEFINITE PROOF THAT THE AMOUNT ADDED REPRESENTED IN COME OF THE ASSESSEE, BUT THE SUPREME COURT FOUND THAT S UCH WAS NOT THE LAW, SINCE CIT V. ANWAR ALI (1970) 76 I TR 696 (SC) IS NO LONGER GOOD LAW AFTER THE EXPLANATION AN D THAT IN CASES WHERE EXPLANATION IS ATTRACTED, LEVY OF PE NALTY OR OTHERWISE WOULD DEPEND UPON THE PRINCIPLES ENUNCIAT ED IN MUSSADILAL RAM BHAROSE'S CASE (1987) 165ITR 14 AND SADAYAPPAN'S CASE (1990) 185 ITR 49. THE MATTER WAS , THEREFORE, REMANDED TO THE TRIBUNAL FOR A DECISION CONSISTENT WITH THOSE GUIDELINES. ITA NO. 2389/AHD/2006 - 8 - 3.6 THE MADRAS HIGH COURT IN CIT V. BALASUBRAMANIAM AND BROS.(1985) 152 ITR 529 HAD HELD THAT THE ASSES SEE HAD SOLD SOME IMPORT LICENSE, THE PROFITS FROM WHIC H CAME TO BE ESTIMATED BY THE ASSESSING OFFICER AT A FIGUR E HIGHER THAN THE ONE REPORTED BY THE ASSESSEE, BECAUSE THE ASSESSEE FAILED TO FURNISH DETAILS OF PURCHASERS OF THE LICENSES, THOUGH REQUIRED OF HIM. IT WAS, IN THIS C ONTEXT, THE INCOME CAME TO BE ESTIMATED AT MARKET QUOTATION S OF PREMIUM PUBLISHED IN COMMERCIAL JOURNALS. THE TRIBU NAL FOUND THAT THERE WAS NOTHING TO SUGGEST INFERENCE O F CONCEALMENT, SINCE RECEIPT OF EXTRA CONSIDERATION F OR SALE OF LICENSE HAD NOT BEEN PROVED BY THE REVENUE. THE HIGH COURT, HOWEVER FOUND THAT MERELY BECAUSE AN ESTIMAT E HAD BEEN MADE, PENALTY CANNOT BE RULED OUT IN THE L IGHT OF THE ASSESSEE'S FAILURE TO GIVE PARTICULARS OF THE P URCHASERS OF THE LICENSES EVEN ON DEMAND ON ALLEGED NON AVAIL ABILITY OF PARTICULARS DUE TO THE TIME LAG AND THE FACT THA T EVEN THE NAMES GIVEN WERE OF PERSONS, WHO COULD NOT BE TRACED. THE RULE OF EVIDENCE IN THE EXPLANATION WOU LD, THEREFORE, HAVE APPLICATION AND THE ASSESSEE HAD NO T ESTABLISHED THAT THE DIFFERENCE BETWEEN THE RETURNE D AND ASSESSED INCOME WAS NOT DUE TO ANY FRAUD OR WILLFUL NEGLECT INASMUCH AS IT WITHHELD THE REQUISITE MATER IAL EVEN WHEN CALLED FOR. IT IS IN THESE CIRCUMSTANCES, THAT THE HIGH COURT FOUND THAT THE TRIBUNAL WAS NOT CORRECT IN CANCELING THE PENALTIES AND THE SUPREME COURT IN TH E PRESENT CASE HAS ENDORSED THE VIEW OF THE HIGH COUR T. 3.7 IT CAN NOW BE SAID THAT WITH REFERENCE TO THE L ANGUAGE OF LAW AND THE PRECEDENTS THE LAW ON THE SUBJECT CA N BE SPELT OUT IN THE FOLLOWING PROPOSITIONS: (1) WHEREVER THERE IS A DIFFERENCE BETWEEN THE RE TURNED AND ASSESSED INCOME, THERE IS AN INFERENCE OF CONCEALMENT AS A RULE OF LAW. (2) THE RESPONSIBILITY FOR REBUTTING SUCH INFERENCE IS SQUARELY ON THE TAX PAYER. (3) THE ASSESSEE IS EXPECTED TO OFFER AN EXPLANATIO N FOR THE DIFFERENCE. ABSENCE OF ANY EXPLANATION, BY ITSE LF, WILL MERIT PENALTY. (4) THE EXPLANATION WHERE OFFERED, SHOULD NOT BE FOUND TO BE FALSE. (5) MERELY BECAUSE THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE HIS EXPLANATION, PENALTY MAY NOT BE EX IGIBLE, IF SUCH EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM. ITA NO. 2389/AHD/2006 - 9 - 3.8 THE LANGUAGE OF THE EXPLANATION HAS UNDERGONE CHANGES FROM TIME TO TIME, BUT THE PRESENT EXPLANAT ION IN THE LIGHT OF THE PRECEDENTS INCORPORATES THE ABOVE PROPOSITIONS. THE LAW ONE WOULD IMAGINE IS CLEAR AN D THERE SHOULD NOT BE ANY SCOPE FOR CONTROVERSY EVEN IN APPLICATION OF THESE PRINCIPLES TO ANY GIVEN SET OF FACTS. 3.9 IT IS, THEREFORE, VERY CLEAR THAT THE RESPONSIB ILITY FOR REBUTTING THE INFERENCE IS SQUARELY ON THE TAX PAYE R AND THE ASSESSEE IS EXPECTED TO OFFER AN EXPLANATION FO R THE ADDITION. IF THE EXPLANATION IS NOT VALID, THE PENA LTY IS AGAIN LEVIABLE. 3.10 FURTHER AS PER THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT 249 ITR 125, THE PENALTY U/S. 271(L)(C) IS JUSTIFIED IF THE ADDI TION REPRESENTED THE ASSESSEE'S REAL INCOME AND THERE WA S CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACC URATE PARTICULARS ON THE PART OF THE ASSESSEE. 4. FURTHER IN A RECENT CASE, THE HON'BLE HIGH COURT IN THE CASE OF M/S. D&H SECHERON ELECTRODES (P) LTD. V. CI T 144 TAXMAN 689 (2005) (M.P.) HAS HELD THAT THE FACT OF SUPPRESSION WAS VERY MUCH WITHIN THE KNOWLEDGE OF T HE ASSESSEE ESPECIALLY A COMPANY BEING MANAGED BY CAS. THE HON'BLE M.P. HIGH COURT FOUND THAT IN A PROFESS IONALLY LED COMPANY MANAGED BY CAS IT IS NOT CORRECT FOR TH E APPELLANT TO ARGUE THAT THERE WAS NO DELIBERATE AND CONSCIOUS ATTEMPT FOR CONCEALMENT OF INCOME. 5. IN THE PRESENT CASE IT IS CLEAR FROM THE DISCUSS ION IN FOREGOING PARAS THAT THE APPELLANT HAD DELIBERATELY SHOWN HIS STATUS AS 'NON-RESIDENT' AND THEREBY TRIED TO A VOID TAXATION ON HIS FOREIGN REMITTANCE - PARA 2.3.1 TO 2.3.3, 2.3,5, 2.3.6. THIS ACTION OF THE APPELLANT HAS LED TO CONCEALMENT OF REAL INCOME CONSCIOUSLY. SIMILARLY W ITH RESPECT TO THE ESTIMATION OF ADDITION ON ACCOUNT OF LOW WITHDRAWAL FOR HOUSEHOLD EXPENSES AS DISCUSSED IN P ARA 3.7, THE APPELLANT HAS CONCEALED ITS REAL INCOME WHICH WAS USED TO MEET HIS DAILY HOUSEHOLD EXPENSES. THEREFORE, BOTH THE INGREDIENTS SET BY THE DECISION S OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES 249 ITR 125 ARE ESTABLISHED. IN VIEW OF THE ABOVE, THE PENALTY LEVIED BY THE A.O. IS UPHELD. ITA NO. 2389/AHD/2006 - 10 - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE AO LEVIED RS.23,42,010/- AS PE NALTY UNDER SECTION 271(1)(C) OF THE ACT ON FINDING AS UNDER:- .. I AM THEREFORE CONVINCED THAT THE ASSESSEE HA D CONCEALED THE PARTICULARS OF HIS INCOME AND ALSO FU RNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE ASSESSEE HAS COMMITTED CLEAR DEFAULT WITHIN THE MEANING OF SECTI ON 274 R.W.S. 271(1)(C) OF THE ACT. 5. ACCORDINGLY, I IMPOSE A PENALTY OF RS.23,42,010/ - BEING MINIMUM PENALTY AS AGAINST THE MAXIMUM PENALTY @ 30 0% OF RS.70,26,030/-. THUS, IT IS OBSERVED THAT PENALTY WAS LEVIED BY THE AO ON THE GROUND THAT HE WAS CONVINCED THAT THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME AS WELL AS OF FURNISHING INAC CURATE PARTICULARS OF INCOME IN RESPECT OF THE AMOUNT OF R S.70,26,030/-. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NEW S ORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME-TAX, [20 06] 282 ITR 0642(GUJ), WHEREIN IT WAS HELD THAT :- WE FIND FROM THE ORDER OF THE INSPECTING ASSISTANT COMMISSIONER, IN THE PENALTY PROCEEDINGS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA. 4 OF THE ORDER : I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSES SEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED I NACCURATE PARTICULARS OF SUCH INCOME. NOW, THE LANGUAGE OF AND/OR MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORD ER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI-CRI MINAL CASE, BUT IT WAS INCUMBENT UPON THE INSPECTING ASSISTANT COMMISSIONER TO COME TO A POSITIVE FINDING AS TO WH ETHER THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT FINDING WAS REAC HED BY THE INSPECTING ASSISTANT COMMISSIONER AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE INSPECTIN G ASSISTANT COMMISSIONER WAS LIABLE TO BE STRUCK DOWN. ITA NO. 2389/AHD/2006 - 11 - 6. IN VIEW OF THE AFORESAID DECISION, IN OUR CONSID ERED OPINION, FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE AO HAS TO ARRIVED AT A POSITIVE FINDING AS TO WHETHER THE ASS ESSEE WAS GUILTY OF CONCEALMENT OF INCOME IN RESPECT OF PARTICULARS AMOUNT OR THE ASSESSEE WAS GUILTY OF FURNISHING OF INACCURATE PAR TICULARS OF INCOME IN RESPECT OF AN AMOUNT. IN THE INSTANT CASE, IT IS OBSERVED FROM THE ORDER OF THE AO THAT HE HAS NOT ARRIVED AT A FINAL CONCLUSION AS TO WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF I NCOME, OR THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTIC ULARS OF INCOME. THE WORD AND USED IN THE ORDER LEVIED PENALTY CLE ARLY INDICATES THAT THE AO COULD NOT CLEARLY SPECIFY THAT ASSESSEE WAS GUILTY OF EITHER CONCEALMENT OF INCOME OR OF FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THEREFORE, IN VIEW OF THE DE CISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF NEW SORATH IA ENGINEERING CO.(SUPRA), THE ORDER OF THE AO SUFFERS FROM A LEGA L ERROR AND THEREFORE, BAD IN LAW. WE THEREFORE, SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND DELETE THE PENALTY OF RS.23.4 2.010/-. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 19/03/2009. SD/- SD/- ( T.K. SHARMA ) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD; DATED 19/03/2009 PARAS # COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD